- KOSPI dropped 500.47 points, or 7.41%, to 6,253.81, as a global selloff in chipmakers weighed on technology heavyweights, driven by concerns over intensifying competition from China and a steep decline in SK Hynix's U.S.-listed shares.
- Samsung Electronics fell 9.15%, while SK Hynix sank 10% after its American depositary receipts (ADRs) fell to a record low in New York, amplifying the impact of the sector-wide selloff on the broader market.
- South Korea's stock market has plunged into a bear market, down 25.9% from its record close on June 22, amid fading interest in the artificial intelligence trade.
- U.S. and Korean tech stocks are now tightly linked, raising concerns for investors as the correlation has increased, reducing diversification and heightening risks if AI spending slows.
- Samsung and SK Hynix are at the center of the AI hardware supply chain, providing the memory chips needed for data centers operated by U.S. technology giants.
- Data-center demand for DRAM has risen from around 40% of global demand last year to more than half this year, indicating a significant shift in the market.
- Samsung's earnings guidance can provide one of the first concrete signals each quarter on the state of AI demand, making it a critical indicator for investors.
South Korea's KOSPI index dropped 500.47 points, or 7.41%, to 6,253.81, marking a significant decline amid a global selloff in chipmakers.
The downturn was largely influenced by fading interest in artificial intelligence and intensifying competition from China.1
Samsung Electronics, which holds a 27.5% weighting in the KOSPI, has seen its stock drop more than 27% since June 18, while SK Hynix has lost nearly 38% of its value since its peak on June 22.23
The iShares MSCI South Korea ETF is down nearly 28% from its June 18 peak, indicating a broader market trend towards a bear market, defined by a decline of more than 20% from a peak.
Analysts have noted that the 60-day correlation between U.S. and Korean tech stocks has risen to about 0.50, its highest since 2021, suggesting that Korea no longer provides diversification against U.S. tech.67
As both companies are central to the AI hardware supply chain, their performance is increasingly tied to global sentiment towards AI demand, which has seen a significant shift recently.
The KOSPI is now down 25.9% from its record close on June 22, reflecting a broader trend of declining investor confidence in the tech sector.
“The KOSPI index has fallen into a bear market, down 25.9% from its record close on June 22, reflecting a broader decline in tech stocks. Analysts warn that the tightening correlation between U.S. and Korean markets heightens risks if AI spending slows, impacting investor sentiment.”
CNBC
